Swiss regionals consolidate

 - December 28, 2010, 9:35 AM

Swiss regional airline Baboo, based in Geneva, and Darwin Airline, headquartered at Lugano Airport in southern Switzerland, an-nounced in late November that they have decided to merge. In fact, the move looked more like a takeover by Darwin of a competitor plagued by a notorious lack of profits.

Before the merger, Baboo announced a stringent restructuring and cost-saving program involving the return of its three Embraer E190s to their lessor and a staff reduction of almost one third–54 out of a total of 167. Baboo operated as an affiliate of Lebanese investment group M1 Travel, which also served as the lessor of all its aircraft. The move left Baboo with a fleet reduced to just the two 74-seat Bombardier Q400 turboprops it acquired in 2007. It dropped services to Athens and London City, leaving 10 destinations in Switzerland, France, Italy, Spain and Romania on the winter schedule.

Darwin flies six Saab 2000s out of Lugano in a scheduled network oriented mostly southwards to Italy and Mediterranean islands. The two airlines maintained a code-sharing agreement for the Geneva-Lugano link, and Darwin flies its Lugano-Zurich route under a wet-lease agreement with Swiss International Airlines.

While Baboo continues its restructuring efforts, the integration of the two airlines' operations should conclude in the early months of this year, subject to approval by the Swiss authorities. The new company plans to keep the Baboo brand for the two Q400s based in Geneva, while Lugano serves as its headquarters and main hub. Baboo CEO Mark Darby announced he will leave the company after completion of the merger.

In 2009 Baboo carried more than 400,000 passengers, achieving sales of $73 million (but no profit), while Darwin carried about 250,000 passengers with annual sales of $40 million.

"Having consolidated Darwin over the last three years, we now start a process aiming at a sustainable expansion of our network and activities, while maintaining our policy of outstanding customer serv-ice at affordable prices," said Darwin CEO Fabio Parini. Serving 20 destinations out of Lugano and Geneva, the newly merged airline has set an annual passenger goal of 500,000 and a sales target of $80 million. Darwin employed a pre-merger staff of 140 and it appears likely that Baboo's remaining staff of 115 will shrink as the company streamlines common operations.